Food/Medicine Bought by DOH to be Donated to Iraq - Subj. to VAT

December 7, 1993 BIR RULING NO. 474-93 FOOD/MEDICINE BOUGHT BY DOH TO BE DONATED TO IRAQ SUBJ. TO VAT 100 (a) 042-92 474-93 Hon. Teofisto Guingona, Jr. Executive Secretary Office of the President Malacaang, Manila This refers to your letter dated September 23, 1993 transmitting to this Office for comment and/or recommendation, the letter dated September 21, 1993 of Congressman Emigdio A. Bondoc, 4th District, Pampanga, requesting exemption from the payment of value-added tax on the medicines and food items to be purchased by the Department of Health (DOH) to be donated to the people of the Republic of Iraq. In reply, we regret to inform you that the said request cannot be granted for lack of legal basis. The 10% value-added tax (VAT) is an indirect tax which can be passed on as part of the cost of the goods sold or services rendered, notwithstanding the fact that it is the Department of Health (DOH) that will purchase the same out of the donated funds of $275,000 from the Philippine Government. In this connection, the DOH is required to withhold and remit the creditable VAT-on the payments to be made to the supplier of medicines and food items, in accordance with Revenue Regulations No. 10-93, effective July 1, 1993, implementing Republic Act No. 7649, amending Section 110 of the National Internal Revenue Code, as amended. LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue